The U.S. business groups have urged the Biden administration to remove punitive tariffs on U.S. imports imposed by the previous administration, as tariffs continue to hit American businesses and consumers while pushing up inflation pressures.
HIGHER PRICES FOR CONSUMERS
“Due in part to these tariffs, the U.S. is now an island of high metal prices, where manufacturers pay 40 percent more for steel compared to their global competitors,” several industry associations representing hundreds of U.S. manufacturers of home appliances, electrical and foodservice equipment, wrote in a recent letter to U.S. Trade Representative (USTR) Katherine Tai.
“These higher costs mean that finished goods produced by U.S. companies cannot compete with cheaper, imported versions, putting American manufacturing jobs at risk,” the letter said, urging the Biden administration to lift the Section 232 steel and aluminum tariffs that were initiated three years ago under the administration of former president Donald Trump.
“These companies are suffering from prolonged and impactful shortages of steel, aluminum, and other key components, which has resulted in record high prices and long manufacturing lead times,” the letter said.
The letter came after a group of over 300 U.S. manufacturing companies last month urged President Joe Biden to immediately terminate the restrictive steel and aluminum tariffs.
“Without termination of the tariffs, this situation will worsen if Washington moves forward with an infrastructure bill to invest in America, as these projects will create more strain on domestic steel and aluminum supplies, causing delays in construction and risking manufacturing jobs,” the group said.
As input costs and consumer prices have been growing at a breakneck pace in recent months, the U.S. companies are making a new push for the Biden administration to lift Trump-era tariffs, on the grounds that tariffs contribute to rising prices and product shortages.
U.S. consumer prices rose 5 percent in May from a year ago, the largest 12-month increase since August 2008, while producer prices surged 6.6 percent in the 12 months through May, the largest gain since November 2010, according to the Labor Department.
Asked whether tariff reduction would help solve shortages and inflation, Cecilia Rouse, chair of the White House Council of Economic Advisers, told reporters last month that “our trade representatives are looking at all of those factors.”
“Trade policy is a much bigger issue, and that needs to be worked out in the context of our global partners and as part of having a really well-running and efficient global economy,” Rouse said.
IMPACT OF TARIFF
While vowing to advance a new worker-centric trade policy, the Biden administration’s officials have been reviewing the tariffs since coming into office five months ago.
“A key element of re-examining past trade policy will be to take into consideration the negative impact of tariffs on jobs, investment, and the American worker,” said Americans for Free Trade spokesperson Jonathan Gold.
“For example, current tariffs on imports from China only continue to deter companies from investing, hiring, and benefitting workers in the United States,” Gold said, adding tariffs must be eliminated as soon as possible to truly accomplish a trade policy that benefits workers.
Americans have paid nearly 94 billion U.S. dollars between February 2018 through April 2021 due to the trade war with China, according to data released by Tariffs Hurt the Heartland, a campaign supported by more than 150 business and agricultural trade associations.
A recent report from Moody’s Investor Services also showed that a majority of the cost of tariffs have been passed on to U.S. importers.
“If the tariffs remain in place, pressure on U.S. retailers will likely rise, leading to a greater pass-through to consumer prices,” the report said.
The tariffs have long been opposed by U.S. companies that import the goods and pay the levies. Last year, more than 3,500 U.S. companies, including Tesla, Coca-Cola, Disney and Ford, filed lawsuits against the Trump administration’s tariffs on China.
Craig Allen, president of U.S.-China Business Council, said the tariffs have harmed American jobs, American consumers, American companies and the country’s global competitiveness.
“The best remedy for boosting trade and creating more U.S. jobs is for both the United States and China to permanently remove tariffs,” Allen told reporters recently.
Allen also noted that China’s temporary tariff exemptions for U.S. imports, market openings under the phase-one trade deal, as well as strong demand amid China’s robust recovery have contributed to the surge in the U.S. goods exports to China.
“These exports mean support for American businesses and families, which could not be more important right now,” he said. Enditem